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Shorts Clean Up in Skullcandy; Stock Plunges on Weak Q1 Outlook

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Short-sellers were booking hefty profits in shares of Skullcandy (NASDAQ: SKUL) on Friday, a Park City, Utah-based developer and distributor of headphones and other audio accessories.

The stock has had a consistently high short interest over the last year and these short-sellers have delivered serious alpha with the stock falling 64 percent over the last 52-weeks versus a gain of better than nine percent for the Nasdaq.

The steep plunge in the share price has resulted in SKUL approaching micro-cap status with a market cap of just $143 million.

On Friday, the shares are getting pounded to the tune of a 23 percent loss after the company's fiscal fourth-quarter results and a dim Q1 outlook.

In recent days, ahead of the report, around 27 percent of the company's float had been sold short. Skullcandy went public in July 2011 at $20 per share, which compares to the current stock price of just $5.18.

For the fiscal fourth-quarter, the company reported adjusted EPS of $0.47, missing analysts' consensus earnings estimates of $0.48 per share by a penny. Sales were $101 million, which was above Wall Street consensus of $98.6 million for the fourth-quarter.

Looking ahead, however, management said that the business is experiencing challenges and the company expects to post a loss of $0.25 to $0.30 per share in the fiscal first-quarter along with a year over year decline in sales of around 30 percent. This would imply Q1 revenue of roughly $37 million.

Prior to the updated guidance, Wall Street was modelling a profit of $0.05 per share on revenue of $59.8 million for the current quarter.

Posted-In: Earnings Long Ideas News Guidance Short Ideas Small Cap Analysis Intraday Update Movers Trading Ideas Best of Benzinga

 

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